HSBC chief economist warns of rising raw material prices: climate change, geopolitical risks and supply bottlenecks are driving super-squeeze

HSBC chief economist warns of rising raw material prices: climate change, geopolitical risks and supply bottlenecks are driving super-squeeze

According to a report by www.finanzen.net, prices of key precious metals are expected to rise significantly due to several challenges in the commodities market. HSBC chief economist Paul Bloxham recently warned that the market should get used to high price levels as there is no relief in sight in the near future. This “super-squeeze” is triggered by several factors such as price pressure, climate change and geopolitical risks.

Climate change has a significant impact on the availability of raw materials. Changing weather conditions have already led to bottlenecks in the supply chain and in the agricultural sector. In addition, there is a lack of investment in expanding metal extraction, especially for environmentally friendly energy sources such as copper, aluminum and nickel. This exacerbates supply shortages and drives up prices. In addition, inventories of iron ore are decreasing, driving up prices for this important material, which is primarily needed for steel production.

Geopolitical risks such as wars in Ukraine and the Gaza Strip and attacks on merchant ships in the Red Sea also disrupt raw material supplies and increase price pressure.

Overall, the duration of the “super squeeze” cannot be predicted and depends on the intensity of the risks mentioned. A global economic downturn could end high prices, as could technological advances that make it easier and less expensive to produce or mine the needed metals. However, no positive developments on the raw materials market are to be expected until then.

Overall, it is important that consumers and industries prepare for continued high prices for important raw materials and take appropriate measures to adapt their strategies and supply chains. This will impact profit margins and potentially lead to higher end-user prices.